H-1B visa

H-1B visa employees are crowding out other workers says new study

According to a new study published by researchers from the University of California, Notre Dame University and the US Department of Treasury, H-1B employees are crowding out other workers and new H-1B hires did not lead to an increase in patent applications.

The study, titled ‘The Effects of High-Skilled Immigration on Firms: Evidence from H-1B Visa Lotteries,’ says that companies gaining additional H-1B visas ‘has an insignificant effect on patenting’ and ‘H-1B employees crowd out the employment of other workers quite substantially.’

Government data used for H-1B Visa Study

The three economists who wrote the paper, Alexander Gelber [University of California], Kirk Doran [Notre Dame University] and Adam Isen [Office of Tax Analysis at the US Department of Treasury], took a new approach to government data in order to reach their conclusions.

Each year at the beginning of April 85,000 H-1B visas become available. When the combined H-1B visa cap of 85,000 is reached, the US immigration service assigns visas using a computer-generated lottery system.

To get an understanding of what happens at firms hiring H-1B personnel, the authors of the paper analysed data from the H-1B lottery, plus data from the Internal Revenue Service (IRS) which shows overall employment at a particular company.

Way that Data was used for study criticised

However, Giovanni Peri – also of the University of California – was critical of Gelber’s, Doran’s and Isen’s use of the lottery data as a source. In particular, Peri said that the three of them had only viewed data for H-1B holders employed ‘late in the season’.

Peri mentioned that for each company winning the lottery, they only received around two H-1B workers from the process. Peri says that this makes it difficult to judge the impact they have on a company.

In an exchange between Peri, Gelber, Doran and Isen, Peri said: “Your paper consists of nothing but 0s [i.e. findings that the effect size is 0, e.g. 0 gain in employment]! That can’t be true!”